The Importance of Understanding Zero, or why LETS is not for everyone

Green Dollars (LETS) have a long history in New Zealand. The idea arrived from its originator in British Columbia, Michael Linton, via London to New Zealand at about 1987. The idea found fruitful soil in a country that was economically devastated by the governments economic policies since 1984. in the early1990s dozens, maybe as many as between 80 and 100, LETS were operating here. Those trading circles brought welcome relief to many who were put out of work and they helped repair a torn social fabric. By 1994 hundreds of people were crowding Christchurch's PLEBS markets. However, from then on, a steady and unstoppable decline set in. The reasons for that were many: mismanagement from within, but also an improved economic situation in the country at large meant that people found opportunities again to spend their time in the mainstream economy.

At the end, only a few more than a dozen of the Green Dollar systems of the early 90s survived, and many of those are threatened with shut down, as is Christchurch's Community Dollar Exchange (formerly PLEBS). Listening to the members who participated with the exchange over the last 18 or 19 years, we hear a lot of disappointment, resentment and bitterness. 'Why is nobody using my services?', 'I cannot spend my credits!' are probably among the most heard complaints. Looking back at the experience, probably a majority of people tend to see it as a failure. However, taking a deeper look, LETS might have failed to fulfill people's expectations of becoming rich and economically secure, but it certainly hasn't failed to point a way forward to a different way of doing economics. A closer examination reveals that most participants have never understood the potent essence of LETS, which I would simply call 'Zero'.

Understanding 'Zero' is the essential ingredient for a successful community exchange system. What does 'Zero' stand for?
- Zero stands for the sum of all the money in the system. Or, in other words, if one adds up all the negative account balances and then adds all the positive account balances, one should arrive at zero. This is true as long as a foolproof accounting system is used where every transaction is both recorded on the credit as well as on the debit side.
- Zero stands for balance. However, that balance is only guaranteed if the Zero point is not shifted by giving away 'free' points (Green Dollars), or if the balance is upset by granting larger credit limits than debit limits. As long as balance is kept, Green Dollars in circulation keep their value.
- Zero stands for the dynamic centre. In order for LETS to work, everyone needs to engage in equal and balanced give and receive. There are always enough points in the system for trading. Participants need to trade through Zero at least once per year, or even better, several times per year.
- Zero stands for the fact that relationships are more important than numbers. We are conditioned in this society that 'more is better' and we 'need to get rich'. Both are propositions that are meaningless in the context of LETS. In LETS we find economic security not because we accumulate - but we build relationships with people around us.
- Zero is also the symbol of a circle. The circle stands for the community of which the individual participant is a member of. In the conventional economy, we are all required to fend for ourselves, in competition with everyone else. In a LETS or mutual credit system, we are all in it together. When creating the means of exchange (points, Green Dollars or any other LETS unit), we do so ourselves in a transaction with another community member. What counts are only three states of being: either we are in commitment to the community, because we have consumed ahead of providing something; or we are in recognition to the community, because we have provided before consuming and thirdly we stay within the limits that we as a community have all agreed to. It needs all of them and therefore both commitment (debit) and recognition (credit) are valued equally. The only other necessary ingredient is solidarity with the community - when we seek to trade to fulfill some of our needs and wants, we need to look within our own community first (buy local, so to speak), before going into the dollar economy. A LETS suffers seriously if we stop our solidarity with the community and walk away from it.
- and finally, Zero is when we join and Zero is when we leave. We enter the system at Zero, therefore the only acceptable way out is at Zero again. Otherwise, what might look like a convenience to the individual turns out to be a major pain to everyone else in the circle.

Understanding and living the concept of 'Zero' requires a 'culture of we', a culture of community. Calling the unit of currency in a mutual credit system a 'dollar' might not be helpful at all, as it tricks our thinking and behaviour into acting according to our mainstream competitive consumer culture. Applying the concept of Zero helps maximising trade while keeping an equilibrium within the community and it supports functional and fulfilling relationships between an individual and a community. A well kept equilibrium makes everyone a winner and therefore increases the quality of life for the whole of the community.

Now, in 2008/09 we are starting to experience the next serious economic downturn. The only reason why this is happening is because our politics and economic systems have failed, while nature continues to provide. Many people will be looking for new ways out of hardship again. However, unless we understand and educate our members the concept of Zero, people's aspirations will be disappointed again and we will miss another opportunity to evolve into a new culture of community. Another inevitable conclusion is that LETS is not for everyone (and not for every Transition Town, either!) - people who do not understand and subscribe to the concept of Zero, or who are not willing to join an stick with a community, should never be invited to participate in a LETS exchange.